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Electronic chemicals: New materials keep Moore’s Law on track

10:38 AM MDT | June 30, 2014 | —Rebecca Coons

Dow: In a market as complex as electronic materials, innovation and customer intimacy are mandatory.

The outlook for electronic chemicals is improving following several years of tepid demand growth, say suppliers to the semiconductor sector. New chemistries and close collaboration are required to help chip makers meet the daunting technical challenge of meeting Moore’s Law through new chip architectures.

Suppliers of electronic chemicals hope the market will rebound in 2014 after wafer start growth was “far more modest” in 2013 than predicted. Consumer demand for smaller, faster, and more energy-efficient devices remains a key driver of growth, and electronic materials are increasingly important to meet the technological challenges of smaller geometries at advanced nodes.

“Driving forces in the consumer electronics market are demand for mobile devices, such as smartphones and tablets, and telecom infrastructure to support the devices,” says Dave Miller, president/electronics and communications at DuPont. “From a technology perspective, there is huge demand for materials that deliver high-speed and high-frequency capabilities; better thermal properties; and smaller, lighter, more flexible form factors.”

Mitchell: Mobility drives industry growth.

The global semiconductor materials market decreased 3% year-on-year (YOY), to $43.5 billion, in 2013—the second year of market contraction—says semiconductor trade association Semi. Total wafer fabrication materials and packaging materials were $22.8 billion and $20.7 billion, respectively. Comparable revenues for these segments in 2012 were $23.4 billion for wafer fabrication materials and $21.4 billion for packaging materials. Semi says “substantial declines” in silicon revenue, advanced substrates, and bonding wire contributed to the YOY decrease in the total semiconductor materials market. Worldwide silicon wafer revenues declined by 13% YOY, to $7.5 billion.

“We didn’t see a tremendous amount of wafer growth [in 2013],” says Chris Kramer, senior v.p. and general manager of Entegris Electronic Materials (Billerica, MA). “It was much smaller and somewhat fragmented as compared to previous years. It was a modest year, from an industry perspective.”

Market data and industry sentiment indicate 2014 will be better for electronic chemicals, however. According to the Semiconductor Industry Association (SIA; Washington), global semiconductor sales reached $26.3 billion in April, an 11.5% increase YOY. SIA expects global sales to reach $325.4 billion in 2014, up 6.5% YOY.

Dow Chemical expects electronics demand to improve this year because of the continued global economic recovery and “continued but modest” demand growth for media tablet and mobile phone devices. Dominic Yang, president/electronic materials at Dow, says the electronic chemicals market will grow YOY, with demand picking up in the latter half of 2014. “Even though there was soft demand at the end of last year and the beginning of this year, we are seeing foundries ramp up capacity utilization ahead of the introduction of new mobile devices, like the iPhone 6 or Samsung Galaxy Note 4.”

The outlook for semiconductor manufacturing materials demand depends on what part of the value chain you serve, Yang says. For example, customers that produce dynamic random-access memory chips (DRAM), are running their facilities hard. “Our DRAM customers, once they build a fab, tend to operate [it] at full capacity or beyond full capacity,” while foundry and logic customers are manufacturing chips for a diverse and changing set of device customers at any given time, he adds.

Normally, the third quarter is the best seasonally, but demand cycles seem to be more in tune with new product introductions, like mobile phones, Yang says. “That is largely driven by the contracts that customers sign with providers when a new model is put on the market. I think there is pent-up demand from consumers because the upgrade factor is increasingly important,” Yang adds. And, while high-end mobile devices have been the main driver of the electronic chemicals market in the last couple of years, Yang says Dow is also seeing continued growth among mid-to-lower-end smartphones and tablets in China and Southeast Asia.

Wayne Mitchell, v.p. and general manager at Air Products’ electronics division—a $1.5-billion business supplying on-site and bulk gases, delivery systems, and process and advanced materials—also expects the semiconductor industry to be a bit stronger than previously anticipated. “We saw our [December quarter] down sequentially, with our [March] quarter flat, essentially. Business began to pick up in the second quarter. The industry is beginning to show seasonality, but we are also looking at a very large industry that is growing. We don’t see the industry growing at quite the same rate as when it peaked in the last decade, but we also see the industry showing more steady growth and less cyclicality.”

Innovation: Dow says its surface finishing solutions are well suited for semiconductor leadframe application.

Mitchell says the preceding decade was one of “extraordinary cyclicality” driven by significant events like the dot-com bubble and the great recession and geographic shifts from the United States and Japan to Taiwan and Korea, which resulted in significant overcapacity and distorted the market. “The semiconductor market then went through a period of consolidation—both from... customer and equipment supplier perspectives—but this is largely behind us now. Today, the 10 capacity leaders represent the majority of the semiconductor industry footprint.”

With less cyclicality, Mitchell expects the semiconductor industry to grow at GDP-like rates. Key drivers will continue to include mobility and systems that support mobility. “That being said, if you look at the other applications in the industry, the PC market has been trending down, although we are beginning to see that stabilize and are hopeful it may even pick up a bit going forward,” Mitchell says. “And, while the markets aren’t as large, there is steady growth in industrial applications... so, although mobility is really what drives industry growth, there is a strong underpinning of solid performance outside of mobility.”

Avantor Performance Materials is seeing “significant growth” on the performance products side of the business, which includes its post-etch residue removers, front-end-of-line (FEOL) surface preparations, and cleaning chemicals, says Gary Dailey, v.p./global marketing at Avantor. “The market outlook varies among analysts from 4% to 12% annual growth. Many suppliers serve specific niche within the industry,” Dailey says. “At Avantor, we think we will grow at the higher end of the range mostly because we are engaged in multiple factor ramp-ups right now for the newer technologies. Companies supplying materials to make components for the new products, like the iPhone, for example, are in growth mode.”

DuPont notes “strong, global growth” in its strategic markets—including 20% annual growth in solar installations over the next few years—although Miller says that the financial health of the photovoltaic industry has been particularly challenging. In addition to DuPont’s consumer electronics product offering, the company is the leading supplier of specialty materials for the solar industry. “Though the industry seems to be returning to growth, the overcapacity it has experienced during the last few years has created unprecedented price pressure on solar panel makers and those who have chosen to cut corners on cost by cutting corners on materials create risks,” Miller says. “These decisions can have serious, longer-term consequences, such as putting system reliability, company reputations, and the credibility of the entire solar industry at risk.”

Moore’s Law

Lackluster economic growth has not tempered consumer demand for more powerful devices, but suppliers and chip makers are struggling to maintain Moore’s Law—the prediction that the number of transistors that can be placed inexpensively on an integrated circuit will double every two years. As the industry shifts to smaller nodes, the traditional methods of adding performance and reducing costs have reached their limits.

“Going from 20 nm [nanometers] to 16 nm, 14 nm, and ultimately down to 10 nm and 7 nm, the technology challenges and costs are increasing substantially,” Mitchell says. “The industry is really having to push hard against technology barriers to stay on track.” For decades, the industry used traditional scaling to stay on the track predicted by Moore’s Law, but that option has been exhausted. Advanced nodes are using complicated device architecture with additional layers in the production of the integrated circuit chips to keep Moore’s Law alive, driving the increased use of new materials. “The requirements for these new materials tend to be much lower in volume, although they’re often higher-value products. A lot of innovation is going into developing these products.”

Lithography has, until this point, been used to miniaturize circuitry, but scaling is running out of room, since the implementation of extreme ultraviolet (EUV) lithography has lagged the technology road maps. With a smaller wavelength, EUV would enable thinner, finer lines to be printed. However, it requires a new light source and optics, and the technical complexities have delayed large-scale use.

This challenge is creating opportunities for companies like Entegris. The delay in EUV “doesn’t mean consumers will wait for the next greatest handheld device that has higher performance or battery life, or more features, or a bigger screen,” Kramer says. “Scaling has upheld Moore’s Law node after node, but now that is up to new materials,” which will drive performance improvements below 20 nm. “These new materials will require new cleans [and] new integration schemes, things that play very very well into Entegris’s wheelhouse and are part of what ATMI had done for years in innovating new approaches to solve customer problems. Now there will be more materials in the stack, more complexity, more interactions—all that need to be comprehended to achieve the necessary performance.”

EUV would also replace current, costly lithography techniques at the most advanced nodes, and driving down costs is always a consideration, Yang says. “What you’re carrying around in your pocket was a $20-million computer in the 1970s,” he adds. “There is always a need to make high-quality products economically viable.”

As new materials get added into the process, Avantor is finding front-end applications for chemistries that had been previously used only at the back end. Migration to the sub-22 nm nodes, along with the increasing use of exotic integration materials in front-end stacks, presents a new array of process challenges for chip makers, Dailey says. FEOL is changing much faster than back-end-of-line (BEOL). As a result, Avantor is developing certain BEOL cleaning chemistries, such as CLk residue removers, for FEOL process steps as well, because the material they interact with in clean and etch processes has migrated from back end to front end. Higher levels of trace impurities in the parts per billion are acceptable in BEOL processes, but impurity levels for FEOL processes need to be at 5 ppb or lower. As a result, quality, process, and supply chain control are key factors to achieve these lower levels of trace impurities to meet the new high-purity demands of chip makers.

Meeting chip challenges

Mitchell says that, although collaboration tends be an “overused” word in the industry, the reality is that the challenges for the semiconductor industry today are so much greater than in the past—that, from a materials perspective, working with customers is not enough. “We also have to work closely with the equipment manufacturers to enable us to bring forth products that are robust enough to meet the needs of our customers in a timely fashion. That’s a significant part of the road to success.”

Allentown, PA: Air Products worker assembles a gas cabinet at the company's semiconductor equipment center.

Yang attributes Dow’s leading market position to its technology, continued investment, and collaborative relationships with customers. Reliability is also a factor, particularly for certain customers whose complex, integrated operations face significant losses from downtime. “Our customers spend $2–3 billion to develop next-generation technologies and about $7 billion equipping the fab,” he says. “When they make an investment like that, they know who they want to work with. They want the partner with the R&D capabilities they need as they move down the technology nodes. Dow is one of the few global companies with lithography, [chemical mechanical planarization], photoresists, and packaging solutions. They also want someone with manufacturing know-how to give them quality materials so they can run their $10-billion facility with maximum yield. They can’t afford the risk of an unreliable supplier.”

Collaboration is vital to advancing new materials and processes into today’s devices, Dailey says. “Increasing collaboration has been talked about for a long, long time in this industry, but I think it is becoming incredibly important as you work your way down the technology road map and begin thinking about the 20-nm and then 12-, 10-, and 8-nm nodes, he says. “The chemistry behind it is getting extremely complex.” Experience is also vital, Dailey adds. “We’ve been in the electronic chemicals and materials market since the beginning of the industry, in the early [19]80’s.” Avantor, formerly Mallinckrodt Baker, includes the legacy products of the J.T. Baker brand, which Dailey says gives the company a strong background in analytical chemistry. “We are able to use that core competency to bring value to the electronic materials space.”

Also, much greater demand for better purity exists because the chip industry has moved from micron to atomic scale, Mitchell says. “Today’s gigafabs cost in the region of $7 billion. If you’ve got $7 billion of investment and that fab is down for any period of time, that can represent a pretty significant loss. It’s also not just whether the fab is on or off; the industry needs to deliver high levels of productivity and yield. If you’re operating a fab at low yields then that can have a huge impact on your cost structure and profitability. Therefore, the demands on us from a materials’ purity standpoint are even greater than they’ve ever been.”

Dailey says that fabs producing 20-nm or 14-nm chips have increased concerns over impurities. “Everything needs to be clean and free of particles,” Dailey says. “There are a lot of companies making filters, which is good, but there are also particles within the chemistry that we are finding can be impactful at these device nodes. For example, if you take a simple solvent like isopropyl alcohol, the reactive components that are used to make the product are always found at some level in the ‘pure’ chemical. We are now finding out that these impurities at even the parts-per-billion or parts-per-trillion range can interact within our specialty blended chemicals, which can ultimately result in yield impact. So, this is why I think Avantor, with our strong analytical expertise, has an edge in helping our customers understand the chemistry that is going on even at the micro level. Cleaning chemicals used to be a mixology-type process, but now it is at a whole other level of complexity.”

Chip manufacturers working with older processes can use lower-cost standard acids and bases for many of their cleaning steps, Dailey says. “But, as you move to the new devices—to the 20-, 14-, 10-, and 8-nm nodes—that’s where things start getting tricky. New materials are coming in, and you start to have issues with compatibility and need specialized cleans. That’s when companies like Avantor come in and collaborate.”

M&A

The electronic chemicals market has been consolidating in recent years as suppliers look to expand their expertise and product offerings to better serve the increasingly technical challenges of their customer base. Entegris, a provider of yield-enhancing materials and solutions for advanced manufacturing environments, completed acquiring ATMI (Danbury, CT), a provider of semiconductor materials for the microelectronics industry, in April. The transaction is expected to yield approximately $30 million in annual cost savings, the company says. Entegris recently upgraded the outlook for its fiscal second quarter, ended 28 June, from $165–175 million to $235–245 million to reflect the addition of ATMI. On a pro forma basis for 2013, the combined company’s sales would be just over $1 billion, or about 45% higher than Entegris as a standalone entity.

Silicon Valley: DuPont technology center focuses on innovations in energy and electronics.

Kramer says the legacy portfolios of Entegris and ATMI were an ideal fit and good matches from technical and cultural standpoints. “If you look at the product lines, they fit together extremely well and cover an even broader and deeper spectrum into the overall semiconductor manufacturing process. This truly is a one-plus-one-equals-three equation. We’re not just bolting on a segment; it’s about creating additional value and innovation. The businesses, the cultures, and the technologies fit together well.”

Post-acquisition, electronic materials makes up about a third of the overall Entegris business, Kramer says. “ATMI was a very strong and innovative business with a varied portfolio across the semiconductor market, including implant gas, wets cleaning, deposition, plating, and packaging,” Kramer says. Critical Materials Handling (CMH)—which primarily comprises Entegris’s original business—makes up the other two thirds. Integration efforts are already well underway, Kramer says. “They didn’t just acquire ATMI to have it continue to operate by itself; we took the time to consider what made the most sense holistically. It was very clear that NOWPak—ATMI’s packaging business and a venerable brand with a 15-year history—fit in extremely well with the fluid handling capabilities of the CMH group. We are able to take the unit-driven business that ATMI built and combine it with how the materials are handled in and around the photo area. It is a powerful combination,” Kramer says.

Entegris also transferred its Gas Microcontamination Control (GMC) product lines to its electronic materials business. “This combination is very exciting,” Kramer says. “It’s been one of the strong players in the purification and filtration of gases, and, just like whether it’s resists or cleaning materials or plating chemistries, the level of contaminants that exist in a gas are becoming more and more problematic for the leading-edge fabs. Any contaminants or impurity can affect a manufacturing process. So now we are combining our implant gas solutions, which had been a mainstay of ATMI, with a great Entegris solution set in GMC.”

Merck KGaA (Darmstadt, Germany) acquired AZ Electronic Materials, which provides high-purity specialty chemical materials for the electronics industry, in May for £1.6 billion ($2.7 billion). AZ, with sales of approximately $730 million in 2013, produces materials that are widely used in integrated circuits and devices, flat-panel displays, and LEDs. The company has a strong operational presence in Asia, which accounts for almost 80% of the company’s revenues.

Merck KGaA says it already leads the market for liquid crystals, and the AZ deal puts it in a better position to offer solutions for the electronics behind the display. “With the acquisition of AZ, we are now in a better position than ever to offer our customers solutions that will also make the devices of tomorrow faster, more intelligent, and more attractive,” Merck KGaA says.

Merck KGaA expects that combining the two companies’ R&D teams will enhance innovation for customers in the electronics industry. Merck KGaA, meanwhile, expects the transaction to reduce annualized cost by €25 million ($34 million) by 2016 by rationalizing overlapping corporate and administrative functions. Integration costs related to the transaction are estimated at about €50 million, spread over 2014–16.

“For many years, AZ has been recognized as one of the leaders in high-purity innovative materials for the high-technology electronics market,” says John Whybrow, chairman of AZ. “As materials become increasingly important in the markets we serve, strong R&D capabilities and a broad base are needed to secure economies of scale and entry into new markets. The opportunity for AZ to combine with Merck KGaA is therefore compelling.”

Last year, KMG Chemicals acquired OM Group’s ultrapure chemicals business in a $60-million deal. The deal substantially advances KMG’s strategy in the high-purity process chemicals market and provides KMG with a strategic presence in the fast-growing Asian market.

On 1 October 2013, Albemarle acquired Cambridge Chemical (Cambridge, UK), a maker of high-purity metal organic chemicals used in the laser market. The financial details of the transaction have not been disclosed.Cambridge Chemical’s technology and products will strengthen Albemarle’s offerings in the electronic materials market, including the LEDs, semiconductor, organic LEDs, and, now, laser segments, the company says. “Our electronic materials business is a critical growth platform for us, built upon our expertise in organometallic chemistry, our backward integration of key raw materials, and our reputation,” says Raphael Crawford, global v.p./performance catalyst and specialty chemicals at Albemarle.

In September 2013, Air Liquide completed the acquisition of Voltaix (Branchburg, NJ), a leading manufacturer of specialty materials for the semiconductor and photovoltaic industries. Financial terms of the deal have not been disclosed. Voltaix manufactures materials used to produce semiconductor devices and advanced solar cells and has expertise and global capabilities in silicon, germanium, and boron chemistries, Air Liquide says. The company operates manufacturing facilities at Branchburg; High Springs, FL; Portland, PA; and Sejong, South Korea. The company employs 185 people worldwide.

“This acquisition combines the resources and expertise of our two companies and creates synergies and growth opportunities to expand our markets and product offerings for semiconductor manufacturers around the world and to meet the growing consumer demand for increasingly powerful flat screens, tablets, and smartphones,” says Michael Graff, senior v.p./Americas and a member of Air Liquide’s executive committee. The acquisition complements Air Liquide’s Aloha product line of advanced precursors and brings together synergies in molecule discovery and scale-up, accelerating the introduction of a broader portfolio of new, high-tech materials to semiconductor manufacturers and therefore enabling increased computing power and connectivity, Air Liquide says.













 
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